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Hi everyone, I have two structural equations of the following form: Y1= a Y2+ b X1 Y2= c Y1+ d X2 I first etimated these two equations using OLS (i.e. ignoring endogeneity). Next I estimated them using 2sls. Essentially what happened was the endogeneous variables (Y2,Y1) changed signs (went from positive significant to negative significant). I was wondering if this was cause for concern. Does it reflect some underlying problems with the data/ model? Or is this just an outcome of endogeneity? I should mention 3sls produced coefficients with the same signs as 2sls. Any insight would be much appreciated. Thanks! sk
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